Sale of assets under CCAA section 36

A buyer meets this when buying assets from a company already under a CCAA order. Section 36(1) says such a debtor company may not sell or otherwise dispose of assets outside the ordinary course of business unless a court authorizes it. The explanatory notes to Alberta’s template initial order also refer to the notice requirements of section 36.

Notice and what the court considers

The company gives notice of the application to the secured creditors likely to be affected (s. 36(2)). In deciding, the court considers, among other things, whether the process was reasonable, whether the monitor approved it, whether the monitor reported that the sale would be more beneficial to creditors than one under a bankruptcy, how far creditors were consulted, the effects on creditors and other interested parties, and whether the consideration is reasonable and fair, taking into account market value (s. 36(3)).

Conditions to read for yourself

• If the buyer is related to the company, s. 36(4) allows authorization only if the court is satisfied that good faith efforts were made to sell to unrelated persons and that the consideration is superior to any other offer made in the process
• Section 36(7) lets the court authorize only if satisfied the company can and will make the payments that would have been required under paragraphs 6(5)(a) and (6)(a)
• Section 36(8) addresses the right of a party to an agreement with the company to use intellectual property included in the sale

See buying assets from an insolvent company through a BIA process and the CCAA.